GAINESVILLE, Fla., April 25 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for the first quarter of 2006 increased 12% to $25.4 million, from $22.6 million in the first quarter of 2005. Net income for the quarter was $1.6 million, or $0.14 per diluted share, a gain of 36% over $1.2 million, or $0.10 per diluted share, in the first quarter of 2005.
Exactech Chairman and CEO Bill Petty, M.D., said, "Our year is off to an excellent start with quarterly results that came in at the upper end of our range of expectations. Sales of knee implant products, the largest segment of our business, rose 7% to $13.9 million from $13.0 million a year ago. Revenue from tissue services was particularly strong with an increase of 27% to $3.3 million, compared with $2.6 million in last year's first quarter. Hip product sales were down 5% to $3.8 million, from $4.0 million in the first quarter of last year. We also had meaningful sales in other areas, including outstanding growth in sales of our new shoulder implant devices and our cement products.
"These results underscored the growing success of our strategy to diversify and broaden our product lines. We will continue to make progress in the mechanical and non-mechanical areas of our business. While hip sales were down slightly in the quarter, we expect that the introduction of alternative bearing surfaces later this year will stimulate sales of our hip implant products. Our diamond bearing surface, still in development, has already created interest in our surgeon customer base."
Petty said, "U.S. sales grew 7% to $19.7 million, from $18.5 million in the comparable quarter of 2005, while international sales increased 39% to $5.7 million during the quarter, from $4.1 million during the first quarter of 2005. International sales for the quarter were 22% of total sales, compared with 18% in the first quarter of 2005. Our international sales continued to benefit from strength in Europe due to market acceptance of our new rotating platform knee."
Chief Financial Officer Jody Phillips said, "Our emphasis on cost control helped provide an excellent boost to our bottom line. Our general and administrative expenses were virtually flat at $2.6 million, and R&D expenses were up 8% to $1.5 million. Total operating expenses were up only 10% and this, coupled with the 12% growth in sales and increase in gross margins, resulted in a gain in operating profit of 53%. As a percentage of sales, operating expenses were 56%, compared with 57% in the first quarter a year ago. The gross margin of 68.0% compared favorably to 66.2% a year ago, reflecting the gains we have made in cost improvements in our internal and external production activities."
Looking forward, Exactech continues to anticipate revenue for the year 2006 of $100 million to $106 million and diluted earnings per share for the year 2006 in the range of $0.58 to $0.66. For the second quarter ending June 30, 2006, the company targets revenue in the range of $24.6 million to $27.0 million and diluted earnings per share in the range of $0.16 to $0.18. The foregoing statements regarding targets for the quarter and the year are forward-looking statements, and actual results may differ materially. These are the company's targets, not predictions of actual performance.
The financial statements follow.
The company has scheduled a conference call on Wednesday, April 26 at 9 a.m. Eastern. The call will cover the company's first quarter results. To participate, call (877) 704-5385 any time after 8:55 a.m. Eastern on April 26. International and local callers should dial (913) 312-1303. While in conference, if callers should experience any difficulty or require operator assistance, they can press the (*) followed by the (0) button. This will call an operator to the line.
For a live webcast of the call, visit http://viavid.net/dce.aspx?sid=00002F7B . An archived webcast will be available on the Internet for 90 days at http://www.hawkassociates.com/exactech/company.htm . Viewers will need Windows Media Player or Real Player to listen to the broadcast.
Based in Gainesville, Fla., Exactech develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians. The company manufactures many of its orthopaedic devices at its Gainesville facility. Exactech's orthopaedic products are used in the restoration of bones and joints that have deteriorated as a result of injury or diseases such as arthritis. Exactech markets its products in the United States and in more than 25 countries in Europe, Asia, Australia and Latin America.
An investment profile on Exactech may be found at http://www.hawkassociates.com/exactech/profile.htm .
Additional information about Exactech, Inc. can be found at http://www.exac.com . An online virtual investor kit containing Exactech press releases, SEC filings, current price quotes, stock charts and other useful information for investors can be found at http://www.hawkassociates.com . Investors may contact Chief Financial Officer Jody Phillips at (352) 377-1140 or Julie Marshall or Frank Hawkins, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com .
This release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which represent the company's expectations or beliefs concerning future events of the company's financial performance. These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward- looking statements. These factors include the effect of competitive pricing, the company's dependence on the ability of third-party manufacturers to produce components on a basis that is cost-effective to the company, market acceptance of the company's products and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.
EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) March 31, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $1,337 $1,007 Trade receivables, net of allowance of $662 and $458 18,562 17,360 Prepaid expenses and other assets, net 607 1,040 Inventories 55,108 53,134 Deferred tax assets 1,160 1,014 Total current assets 76,774 73,555 PROPERTY AND EQUIPMENT: Land 1,015 1,015 Machinery and equipment 13,948 13,483 Surgical instruments 24,546 24,186 Furniture and fixtures 2,042 1,957 Facilities 10,455 8,884 Total property and equipment 52,006 49,525 Accumulated depreciation (20,167) (18,843) Facilities expansion in progress 15 1,507 Net property and equipment 31,854 32,189 OTHER ASSETS: Product licenses and designs, net 1,103 1,140 Deferred financing costs, net 259 283 Notes receivable - related party 2,435 2,053 Other investments 506 571 Advances and deposits 633 879 Patents and trademarks, net 4,245 4,169 Goodwill 352 352 Other non-current assets 14 -- Total other assets 9,547 9,447 TOTAL ASSETS $118,175 $115,191 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $8,006 $9,874 Refundable deposits from customers 179 178 Income taxes payable 737 367 Current portion of long-term debt 1,263 1,109 Commissions payable 2,014 1,704 Royalties payable 836 625 Other liabilities 1,449 1,228 Total current liabilities 14,484 15,085 LONG-TERM LIABILITIES: Deferred tax liabilities 3,718 3,757 Line of credit 19,101 17,328 Long-term debt, net of current portion 11,257 11,253 Other long-term liabilities -- 35 Total long-term liabilities 34,076 32,373 Total liabilities 48,560 47,458 SHAREHOLDERS' EQUITY: Common stock 114 114 Additional paid-in capital 23,955 23,698 Accumulated other comprehensive income (loss) 14 (35) Retained earnings 45,532 43,956 Total shareholders' equity 69,615 67,733 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $118,175 $115,191 EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three Month Periods Ended March 31, 2006 2005 NET SALES $25,412 $22,607 COST OF GOODS SOLD 8,141 7,638 Gross profit 17,271 14,969 OPERATING EXPENSES: Sales and marketing 7,886 7,156 General and administrative 2,561 2,551 Research and development 1,541 1,430 Depreciation and amortization 1,411 1,149 Royalties 832 689 Total operating expenses 14,231 12,975 INCOME FROM OPERATIONS 3,040 1,994 OTHER INCOME (EXPENSE): Interest income 43 25 Interest expense (496) (102) Foreign currency exchange gain (loss) (10) (49) Total other expense (463) (126) INCOME BEFORE INCOME TAXES 2,577 1,868 PROVISION FOR INCOME TAXES 937 618 INCOME BEFORE EQUITY IN NET LOSS OF OTHER INVESTMENTS 1,640 1,250 EQUITY IN NET LOSS OF OTHER INVESTMENTS (64) (92) NET INCOME $1,576 $1,158 BASIC EARNINGS PER SHARE $0.14 $0.10 DILUTED EARNINGS PER SHARE $0.14 $0.10 SHARES - BASIC 11,375 11,151 SHARES - DILUTED 11,596 11,565
Audio: http://viavid.net/dce.aspx?sid=00002F7BExactech, Inc.CONTACT: Jody Phillips, Chief Financial Officer, Exactech,+1-352-377-1140; or Julie Marshall or Frank Hawkins, both of HawkAssociates, +1-305-451-1888, or info@hawkassociates.com, for Exactech
